ABSAS SOLUTIONS PVT LTD

TEST ASSIGNMENT

Accounting and Finance Test

This test assignment has been divided into two parts. First part contains an essay of 500 words on
the topic provided and second part includes numerical questions of finance.
Kindly complete both the parts. Make sure that your essay is plagiarism free and you have
provided proper calculations in the practical part.

PART 1
Please write an essay of approximately 500 words on the topic provided below. Make sure that you do not
copy paste anything from internet, you can see the required material from internet but you need to write
each and every sentence in your own words.
Topic: Whether banking and supervisory structures at EU level proved adequate in responding to
the debt crisis.
Referencing: APA (Minimum 7 References)

PART 2
Please solve both the questions using MS EXCEL
Question 1
A firm whose cost of capital is 10% is considering two mutually exclusive projects X and Y, the details of
which are:
Year

Project X

Project Y

Cost

Rs. 70,000

Rs. 70,000

Cash Inflows

Rs. 10,000

Rs. 50,000

Rs. 20,000

Rs. 40,000

Rs. 30,000

Rs. 20,000

Rs. 45,000

Rs. 10,000

Rs. 60,000

Rs. 10,000

Compute the Net Present Value at 10%, Profitability Index, and Internal Rate of Return of the two
projects.

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TEST ASSIGNMENT

Formulae used:
Requirements: The present worth factor = The reciprocal of the term (1+r)n
r is the discounting factor or rate of discount generally market rate of interest/bank
rate of interest)
n is the number of for which the present value of money is converted in to future or
vice versa.
1. Net Present Value:
T t

BC
t 0

Bt C t
(1 r ) n

Where B is the present value of benefit

C is the present value of cost
2. Profitability Index (Benefit- Cost ratio)
BCR= Present value of Benefits/Present Value of Cost
3. Internal rate of return:
Internal rate of return is the rate for which net present value is equal to zero.
So for calculation put NPV equation is equal to zero and find r

Note For solution see the attached sheets

Question 2
Nick Ltd acquired 100% of the issued capital of Wing Ltd on 1 July 2011 for $270000. The statements of
financial position of the companies immediately after the acquisition are provided below. All assets have
been reported following fair value.
Statement of Financial Position
For the year ended 1 July 2011
Nick Ltd
$
Shareholders equity

Wing Ltd
$

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TEST ASSIGNMENT
Share capital
General reserve
Retained earnings
Total shareholders equity
Assets
Current assets
Cash at Bank
Accounts Receivable
Inventory
Non-current assets
Investment in Wing Ltd
Land
Plant & Equipment

450,000
45,000
140,000
635,000

180,000
25,000
20,000
225,000

50,000
20,000
100,000
170,000

30,000
10,000
25,000
65,000

270,000
250,000
100,000

---200,000
80,000

620,000
Total assets
Liabilities
Current liabilities
Accounts Payable
Interest Payable
Non-current liabilities
Bank loan
Total liabilities
Net assets

790,000

280,000
345,000

40,000
15,000

10,000
8,000

55,000

18,000

100,000
155,000
635,000

102,000
120,000
225,000

Required
1. Calculate Goodwill (show workings)
2. Prepare consolidation journal entry at the date of acquisition.
3. Prepare consolidation worksheet.
4. Prepare the consolidated statement of financial position as at 1 July 2011 (immediately after the
acquisition).